Trends & ForecastsAugust 24, 2021

Depop: A Fashion Ecosystem Changing the Way Retail Works

By LUCIA ROMANO | STAFF REPORTER

Depop is a social marketplace where over 27+ million fashion-forward customers connect to buy, sell, and discover unique pieces from around the world.

 

The app is transforming the world of retail through its eco-conscious global community of fans making fashion more inclusive, diverse, and less wasteful. Boasting $70 million in revenue, 4 million active buyers, and 2 million active sellers, Depop is a leading marketplace where the next generation is challenging the traditional fast fashion retail industry.

 

Recently, Depop was acquired by e-commerce powerhouse Etsy for $1.6 Billion, a clear sign that the future of retail is changing—hopefully for the better.

 

Reinventing the runway

Depop is carving out a place for resold fashion in the crowded traditional retail market by reinventing how consumers experience fashion. The global fashion resale market is valued at  $33B and is experiencing rapid growth.

 

The concept of secondhand fashion is part of the broader cultural shift to a sharing economy, aligned with such innovations as ride and home-sharing and music streaming. It is a significant step in the global movement towards a more circular economy, where the products are reused and reinvented to reduce waste.

 

Secondhand fashion retailers like Depop offer conscious consumers access to eco-friendly solutions, and it also allows them to enjoy new secondhand and upcycled pieces at affordable prices. The style options on Depop are unlimited; finally, there is a place to satisfy the appetites of shoppers looking for niche pieces, even if it might be “weird.”

 

The uprising of fashion resale is unlikely to be usurped any time soon. Several major consumer trends are powering the industry’s growth and have far-reaching implications for the future of retail.

 

A crusade against the traditions of retail

Secondhand fashion has begun to experience massive growth as younger consumers continue making buying decisions based on their values, in addition to value. This new shift in consumer behavior resulting from the next generation is already taking effect.

 

According to GlobalData, the retail resale market is now growing 11x faster than traditional retail. While socially conscious shopping and the resale sector rose before COVID, the pandemic catalyzed both markets.

 

During quarantine, most consumers developed a sharpened sense of social awareness that collided with conservative spending habits due to the global economic downturn and worldwide product shortages. The combination of events catapulted the resale market into the mainstream.

 

The resale market has a distinct competitive advantage over the traditional retail market because it avoids the risk of supply chain disruption that plagued many other retailers during the pandemic.

 

As many major retail players struggled to keep up with increased demand, Depop avoided complications because its inventory is already in users’ closets. Furthermore, Depop’s interactive social media experience proved to be an advantage that captured the influencer-obsessed Gen Z consumer market.

 

Branded for Gen Z

Depop is a massive hit with Gen Z because it has taken a strategic seat at the intersection of social media and social impact. Depop presents a unique offering that leverages social media to engage the new generation of conscious consumers.

 

Fostering communities through its app, Depop provides a stage for sellers to model their wares on Instagram and TikTok and facilitates the growth of a large following. The interactive business model has earned Depop a highly engaged and loyal user base, with 75% of sales coming from repeat customers.

 

Gen Z also loves Depop for the opportunity to start a lucrative side hustle from their bedrooms that earn not just cash but influence. The chance to rise as an influencer is a significant draw of Gen Zers to Depop.

 

While not all users will achieve social media stardom, consumers enjoy having an outlet to showcase their self-expression. As many nations are experiencing a cultural shift towards celebrating unique personal identity and gender nonconformity, increased demand for non-traditional pieces has emerged. Users feel that sharing their distinctive style on social media is a form of self-empowerment and a chance to live the influencer lifestyle at best.

 

Unlike past generations, Gen Z gives more social cred to having a reused product than a new product. More Gen Zers frequently update their wardrobes with ethical and unique pieces thanks to Depop’s endless options and affordable prices.

 

Searching Depop for new and cool used pieces is part of the thrill of the hunt on Depop. It is more exciting than traditional retail stores, where any item pulled off the shelf has 100 matching copies behind it. The next generation would rather hunt for hidden gems than accept the status quo presented in department stores.

 

Gen Z isn’t just a trendy generation; they care deeply about environmentalism and sustainability. According to a recent survey from Pew Research, Gen Zers are more likely than any other generation to count climate change as their top personal concern.

 

Depop embraces its customer’s values through its eco-friendly branding and even announced plans to obtain the “Climate Neutral” label. The demand for sustainability and denouncement of fast fashion represents a marked shift in consumer sentiment, led by Gen Z, and presents significant challenges to the future of retail.

 

The unwritten future of retail

It is more apparent than ever that today’s consumers demand sustainable fashion. Evidence shows a health consumer segment with an appetite for momentum hundreds of millions back up these projections in venture capital that poured into resale last year—strong IPOs from competitors seeing success, including the RealReal, Poshmark, Mercari, and thredUp.

 

Recently Etsy made a decisive bet on sustainable fashion by acquiring Depop for $1.625M. Considering Etsy is one of the best e-commerce companies in the world, Depop will scale at the expense of luxury brands.

 

The market is already showing a growing trend of brands investing in resale opportunities. Foreseeing the impending changes in the market, many luxury brands and traditional retailers are already pivoting their strategy by launching in-house resale and rental services.

 

For example, in June, Rent the Runway announced that it is expanding into resale “noticed members buying pre-loved items from us at twice their usual rate. Some may consider Etsy’s gutsy acquisition disruptive, but it will not be long before resale capabilities become a business imperative.

 

The retail resale market is on the path to double by 2024 to nearly $64B. As customer demand for secondhand fashion continues to accelerate, there is plenty of room for competitors ready to capitalize on the growing trend.

 

While Depop is currently trending as a market leader backed by a devoted Gen Z fanbase, its share of the overall resale market is relatively small–less than 2% according to investment-bank advisory form Evercore. Now backed by Etsy, the question isn’t if Depop will grow, but how much.